TORONTO Olympic Steel
Inc. reported "choppy" steel prices in the first quarter as
increased supply of flat-rolled steel put margins under
"The first quarter could be
characterized as uneven, with most of the quarter under
supply-side pricing pressure. This resulted in choppy steel
prices and pressured margins, especially in carbon and
stainless flat-rolled areas," Olympic Steel president and chief
operating officer David Wolfort said during an earnings
Other Olympic executives noted
that the increased supply came from both domestic mills and
imports, as high prices in the United States compared with the
rest of the world attracted offshore offers.
The Bedford Heights, Ohio-based
metals service center sold 311,000 tons of flat-rolled material
in the first quarter, up 21 percent from the fourth quarter but
down 1.9 percent from the first quarter of 2011, Wolfort
The decline resulted largely
from a "robust" spot market in the first quarter of 2011 that
wasnt repeated in the same quarter this year, he said.
The first half of the year also is typically a time for price
increases, which havent happened as often in 2012.
Olympic has shifted more of its
business to contracts, partially due to a less-active spot
market, Wolfort said. However, demand has stayed consistent
throughout the first quarter, with the second quarter on course
for a similar trend, he added.
Olympic singled out as bright
spots the startup of a new temper mill in Gary, Ind., and the
continued strong performance of Romeoville, Ill.-based Chicago
Tube & Iron (CTI). Olympics new specialty metals
facility in Streetsboro, Ohio, should boost its ability to
serve the food and food services market. Specialty metals now
make up about 10 percent of the companys consolidated
sales mix, Wolfort said.
The Gary facility ramped up to
170 tons per day by the end of the March and is now at 30
percent of its full capacity of 150,000 tons per year, he said,
noting that CTI achieved higher profit margins than the company
as a whole, notching up the strongest first-quarter performance
in its history. It is expected to continue performing well in
the second quarter.
CTI recorded product sales of
$65.4 million, or 17 percent of Olympic consolidated sales,
Wolfort said. "We are now a major player in pipe and tube,"
Olympic executives pegged
capital expenditures at about $8 million in the first quarter
and between $30 million and $37 million for the year. Roughly
$5 to $10 million of that will be used for maintenance and to
keep existing facilities up and running, while some will also
be used for new equipment.
Olympic will be looking more at
mergers and acquisitions than at organic growth in the near
future, they added.